What is the true initial cost figure the company

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Reference no: EM132069216

Caughlin Company needs to raise $50 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 60 percent common stock, 10 percent preferred stock, and 30 percent debt. Flotation costs for issuing new common stock are 10 percent, for new preferred stock, 7 percent, and for new debt, 4 percent. What is the true initial cost figure the company should use when evaluating its project?

Reference no: EM132069216

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